By Coleman H.B. No. 2684
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to reinvestment zones and tax increment financing under
1-3 the Tax Increment Financing Act, tax abatement agreements within
1-4 those zones, and the administration of certain local government
1-5 corporations.
1-6 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-7 SECTION 1. Section 311.002(1), Tax Code, is amended to read
1-8 as follows:
1-9 (1) "Project costs" means the expenditures made or
1-10 estimated to be made and monetary obligations incurred or estimated
1-11 to be incurred by the municipality establishing a reinvestment zone
1-12 that are listed in the project plan as costs of public works or
1-13 public improvements inside or outside [in] the zone, plus other
1-14 costs incidental to those expenditures and obligations. "Project
1-15 costs" include:
1-16 (A) capital costs, including the actual costs of
1-17 the acquisition and construction of public works, public
1-18 improvements, new buildings, structures, and fixtures; the actual
1-19 costs of the acquisition, demolition, alteration, remodeling,
1-20 repair, or reconstruction of existing buildings, structures, and
1-21 fixtures; and the actual costs of the acquisition of land and
1-22 equipment and the clearing and grading of land;
1-23 (B) financing costs, including all interest paid
1-24 to holders of evidences of indebtedness or other obligations issued
2-1 to pay for project costs and any premium paid over the principal
2-2 amount of the obligations because of the redemption of the
2-3 obligations before maturity;
2-4 (C) real property assembly costs;
2-5 (D) professional service costs, including those
2-6 incurred for architectural, planning, engineering, and legal advice
2-7 and services;
2-8 (E) imputed administrative costs, including
2-9 reasonable charges for the time spent by employees of the
2-10 municipality in connection with the implementation of a project
2-11 plan;
2-12 (F) relocation costs;
2-13 (G) organizational costs, including the costs of
2-14 conducting environmental impact studies or other studies, the cost
2-15 of publicizing the creation of the zone, and the cost of
2-16 implementing the project plan for the zone;
2-17 (H) interest before and during construction and
2-18 for one year after completion of construction, whether or not
2-19 capitalized;
2-20 (I) the cost of operating the reinvestment zone
2-21 and project facilities;
2-22 (J) the amount of any contributions made by the
2-23 municipality from general revenue for the implementation of the
2-24 project plan; and
2-25 (K) payments made at the discretion of the
2-26 governing body of the municipality that the municipality finds
2-27 necessary or convenient to the creation of the zone or to the
3-1 implementation of the project plans for the zone.
3-2 SECTION 2. Section 311.009, Tax Code, is amended by adding
3-3 Subsection (g) to read as follows:
3-4 (g) A member of the board of directors of a reinvestment
3-5 zone:
3-6 (1) is not a public official by virtue of that
3-7 position; and
3-8 (2) unless otherwise ineligible, may be appointed to
3-9 serve concurrently on the board of directors of a local government
3-10 corporation created under Subchapter D, Chapter 431, Transportation
3-11 Code.
3-12 SECTION 3. Section 311.010, Tax Code, is amended by amending
3-13 Subsections (a) and (b) and adding Subsections (d)-(f) to read as
3-14 follows:
3-15 (a) The board of directors of a reinvestment zone shall make
3-16 recommendations to the governing body of the municipality that
3-17 created the zone concerning the administration of this chapter in
3-18 the zone. The [In addition to the powers granted to the board
3-19 under this chapter, the] governing body of the municipality by
3-20 ordinance or resolution may authorize [delegate to] the board to
3-21 exercise any of the municipality's powers with respect to the
3-22 administration, management, or operation of the zone or [and duties
3-23 relating to] the implementation of the project plan for the zone,
3-24 except that the governing body may not authorize the board to:
3-25 (1) issue bonds;
3-26 (2) impose taxes or fees;
3-27 (3) exercise the power of eminent domain; or
4-1 (4) give final approval to the project plan [considers
4-2 advisable].
4-3 (b) The board of directors of a reinvestment zone and the
4-4 governing body of the municipality that creates a reinvestment zone
4-5 may each enter into agreements as the board or the governing body
4-6 considers necessary or convenient to implement the project plan and
4-7 reinvestment zone financing plan and achieve their purposes. An
4-8 agreement may provide for the regulation or restriction of the use
4-9 of land by imposing conditions, restrictions, or covenants that run
4-10 with the land. An agreement may during the term of the agreement
4-11 dedicate, pledge, or otherwise provide for the use of revenue in
4-12 [from] the tax increment fund to pay any project [the] costs that
4-13 benefit the reinvestment zone, regardless of whether the public
4-14 works or public improvements are inside or outside the zone,
4-15 including project costs relating to the cost of buildings, schools,
4-16 or other educational facilities owned by or on behalf of a school
4-17 district, community college district, or other political
4-18 subdivision of this state, railroad or transit facilities,
4-19 affordable housing, the remediation of conditions that contaminate
4-20 public or private land or buildings, the preservation of the facade
4-21 of a private or public building, the demolition of public or
4-22 private buildings, or the replacement of [replacing] housing or
4-23 areas of public assembly [in or out of the zone]. Project costs
4-24 associated with public works or public improvements that are
4-25 located outside a reinvestment zone must be approved by each taxing
4-26 unit that deposits or agrees to deposit any part of its tax
4-27 increment into the tax increment fund for the zone if any portion
5-1 of that taxing unit's tax increment will be used to pay for the
5-2 public works or improvements that are located outside the zone. An
5-3 agreement may dedicate revenue from the tax increment fund to pay a
5-4 neighborhood enterprise association for providing services or
5-5 carrying out projects authorized under Subchapters E and G, Chapter
5-6 2303, Government Code, in the zone. The term of an agreement with
5-7 a neighborhood enterprise association may not exceed 10 years.
5-8 (d) The board of directors of a reinvestment zone may
5-9 exercise any power granted to a municipality by Section 311.008,
5-10 except that:
5-11 (1) the municipality that created the reinvestment
5-12 zone by ordinance or resolution may restrict any power granted to
5-13 the board by this chapter; and
5-14 (2) the board may exercise a power granted to a
5-15 municipality under Section 311.008(a)(2) only with the consent of
5-16 the governing body of the municipality.
5-17 (e) After the governing body of a municipality by ordinance
5-18 creates a reinvestment zone under this chapter, the board of
5-19 directors of the zone may exercise any power granted to a board
5-20 under this chapter.
5-21 (f) The board of directors of a reinvestment zone and the
5-22 governing body of the municipality may enter into a contract with a
5-23 local government corporation to manage the reinvestment zone or
5-24 implement the project plan and reinvestment zone financing plan for
5-25 the term of the agreement. In this subsection, "local government
5-26 corporation" means a local government corporation created by the
5-27 municipality under Chapter 431, Transportation Code.
6-1 SECTION 4. Section 311.011(f), Tax Code, is amended to read
6-2 as follows:
6-3 (f) In a zone designated under Section 311.005(a)(5) that is
6-4 located in a county with a population of 2.1 million or more, the
6-5 project plan must provide that at least one-third of the [surface
6-6 area of the zone, excluding roads, streets, highways, utility
6-7 rights-of-way, and other public areas or areas exempt from ad
6-8 valorem taxation, be dedicated to residential housing and that at
6-9 least one-third of the] tax increment of the zone be used to
6-10 provide affordable [dedicated to providing low-income] housing
6-11 during the term of the zone.
6-12 SECTION 5. Chapter 311, Tax Code, is amended by adding
6-13 Section 311.0125 to read as follows:
6-14 Sec. 311.0125. TAX ABATEMENT AGREEMENTS. (a)
6-15 Notwithstanding any provision in this chapter to the contrary, a
6-16 taxing unit other than a school district may enter into a tax
6-17 abatement agreement with an owner of real or personal property in a
6-18 reinvestment zone, regardless of whether the taxing unit deposits
6-19 or agrees to deposit any portion of its tax increment into the tax
6-20 increment fund.
6-21 (b) To be effective, an agreement to abate taxes on real
6-22 property in a reinvestment zone must be approved by:
6-23 (1) the board of directors of the reinvestment zone;
6-24 and
6-25 (2) the governing body of each taxing unit that
6-26 imposes taxes on real property in the reinvestment zone and
6-27 deposits or agrees to deposit any of its tax increment into the tax
7-1 increment fund for the zone.
7-2 (c) In any contract entered into by the board of directors
7-3 of a reinvestment zone in connection with bonds or other
7-4 obligations, the board may covenant that the board will not approve
7-5 a tax abatement agreement that applies to real property in that
7-6 zone.
7-7 (d) If a taxing unit enters into a tax abatement agreement
7-8 authorized by this section, taxes that are abated under that
7-9 agreement are not considered taxes to be imposed or produced by
7-10 that taxing unit in calculating the amount of:
7-11 (1) the tax increment of that taxing unit; or
7-12 (2) that taxing unit's deposit to the tax increment
7-13 fund for the reinvestment zone.
7-14 SECTION 6. Section 311.013, Tax Code, is amended by adding
7-15 Subsection (j) to read as follows:
7-16 (j) Section 26.05(f) does not prohibit a taxing unit from
7-17 depositing all of the tax increment produced by the taxing unit in
7-18 a reinvestment zone into the tax increment fund for that zone.
7-19 SECTION 7. Section 431.101, Transportation Code, is amended
7-20 to read as follows:
7-21 Sec. 431.101. CREATION OF LOCAL GOVERNMENT CORPORATION.
7-22 (a) A local government corporation may be created to aid and act
7-23 on behalf of one or more local governments to accomplish any
7-24 governmental purpose of those local governments. To be effective,
7-25 the articles of incorporation and the bylaws of a local government
7-26 corporation must be approved by ordinance, resolution, or order
7-27 adopted by the governing body of each local government for which
8-1 the corporation is created to aid and act on behalf of.
8-2 (b) A local government corporation has the powers of a
8-3 corporation authorized for creation by the commission under this
8-4 chapter.
8-5 (c) The provisions of the Texas Non-Profit Corporation Act
8-6 (Article 1396-1.01 et seq., Vernon's Texas Civil Statutes) relating
8-7 to powers, standards of conduct, and interests in contracts apply
8-8 to the directors and officers of the local government corporation.
8-9 (d) A provision of this chapter relating to the creation,
8-10 dissolution, administration, or supervision of a corporation by the
8-11 commission does not apply to a local government corporation.
8-12 (e) Section 394.904(a), Local Government Code, applies to
8-13 property and improvements owned by a local government corporation.
8-14 Section 394.904(b) of that code applies to each contract awarded by
8-15 the local government corporation.
8-16 (f) A member of the board of directors of a local government
8-17 corporation:
8-18 (1) is not a public official by virtue of that
8-19 position; and
8-20 (2) unless otherwise ineligible, may be appointed to
8-21 serve concurrently on the board of directors of a reinvestment zone
8-22 created under Chapter 311, Tax Code.
8-23 SECTION 8. Chapter 311, Tax Code, is amended by adding
8-24 Section 311.018 to read as follows:
8-25 Sec. 311.018. CONFLICTS WITH MUNICIPAL CHARTER. To the
8-26 extent of a conflict between this chapter and a municipal charter,
8-27 this chapter controls.
9-1 SECTION 9. Section 311.003(h), Tax Code, is repealed.
9-2 SECTION 10. Section 403.302(d), Government Code, as amended
9-3 by Chapters 1039, 1040, and 1071, Acts of the 75th Legislature,
9-4 Regular Session, 1997, is reenacted and amended to read as
9-5 follows:
9-6 (d) For the purposes of this section, "taxable value" means
9-7 the market value of all taxable property less:
9-8 (1) the total dollar amount of any residence homestead
9-9 exemptions lawfully granted under Section 11.13(b) or (c), Tax
9-10 Code, in the year that is the subject of the study for each school
9-11 district;
9-12 (2) the total dollar amount of any exemptions granted
9-13 before May 31, 1993, within a reinvestment zone under agreements
9-14 authorized by Chapter 312, Tax Code;
9-15 (3) subject to Subsection (e), the total dollar amount
9-16 of any captured appraised value of property that is located in a
9-17 reinvestment zone [on August 31, 1999], [that] generates a tax
9-18 increment paid into a tax increment fund, and is eligible for tax
9-19 increment financing under Chapter 311, Tax Code, under a
9-20 reinvestment zone financing plan approved under Section 311.011(d),
9-21 Tax Code, before September 1, 1999;
9-22 (4) the total dollar amount of any exemptions granted
9-23 under Section 11.251, Tax Code;
9-24 (5) the difference between the comptroller's estimate
9-25 of the market value and the productivity value of land that
9-26 qualifies for appraisal on the basis of its productive capacity,
9-27 except that the productivity value estimated by the comptroller may
10-1 not exceed the fair market value of the land;
10-2 (6) the portion of the appraised value of residence
10-3 homesteads of the elderly on which school district taxes are not
10-4 imposed in the year that is the subject of the study, calculated as
10-5 if the residence homesteads were appraised at the full value
10-6 required by law;
10-7 (7) a portion of the market value of property not
10-8 otherwise fully taxable by the district at market value because of
10-9 action required by statute or the constitution of this state that,
10-10 if the tax rate adopted by the district is applied to it, produces
10-11 an amount equal to the difference between the tax that the district
10-12 would have imposed on the property if the property were fully
10-13 taxable at market value and the tax that the district is actually
10-14 authorized to impose on the property, if this subsection does not
10-15 otherwise require that portion to be deducted;
10-16 (8) the market value of all tangible personal
10-17 property, other than manufactured homes, owned by a family or
10-18 individual and not held or used for the production of income;
10-19 (9) the appraised value of property the collection of
10-20 delinquent taxes on which is deferred under Section 33.06, Tax
10-21 Code;
10-22 (10) the portion of the appraised value of property
10-23 the collection of delinquent taxes on which is deferred under
10-24 Section 33.065, Tax Code; and
10-25 (11) the amount by which the market value of a
10-26 residence homestead to which Section 23.23, Tax Code, applies
10-27 exceeds the appraised value of that property as calculated under
11-1 that section.
11-2 SECTION 11. Sections 403.302(e)-(g), Government Code, are
11-3 amended to read as follows:
11-4 (e) Subsection (d)(3) applies only to the captured appraised
11-5 value of:
11-6 (1) real property that is located in the reinvestment
11-7 zone before September 1, 1999; or
11-8 (2) an improvement to real property described by
11-9 Subdivision (1), regardless of the date the improvement is made.
11-10 (f) The study shall determine the values as of January 1 of
11-11 each year.
11-12 (g) [(f)] The comptroller shall publish preliminary
11-13 findings, listing values by district, before February 1 of the year
11-14 following the year of the study. Preliminary findings shall be
11-15 delivered to each school district and shall be certified to the
11-16 commissioner of education.
11-17 (h) [(g)] On request of the commissioner of education or a
11-18 school district, the comptroller may audit a school district to
11-19 determine the total taxable value of property in the school
11-20 district, including the productivity values of land only if the
11-21 land qualifies for appraisal on that basis and the owner of the
11-22 land has applied for and received a productivity appraisal. The
11-23 comptroller shall certify the comptroller's findings to the
11-24 commissioner.
11-25 SECTION 12. Section 403.303(a), Government Code, is amended
11-26 to read as follows:
11-27 (a) A school district or a property owner whose property is
12-1 included in the study under Section 403.302 and whose tax liability
12-2 on the property is $100,000 or more may protest the comptroller's
12-3 findings under Section 403.302(g) [403.302(f)] or (h) [(g)] by
12-4 filing a petition with the comptroller. The petition must be filed
12-5 not later than the 40th day after the date on which the
12-6 comptroller's findings are certified to the commissioner of
12-7 education and must specify the grounds for objection and the value
12-8 claimed to be correct by the school district or property owner.
12-9 SECTION 13. Section 431.102, Transportation Code, is amended
12-10 by adding Subsection (c) to read as follows:
12-11 (c) The requirement of Section 394.021(a), Local Government
12-12 Code, that all directors must be residents of the local government
12-13 shall not be applicable to directors of a local government
12-14 corporation except that a person may not be appointed to the board
12-15 of a local government corporation if the appointment of that person
12-16 would result in less than a majority of the board members being
12-17 residents of the local government.
12-18 SECTION 14. Section 311.004(a), Tax Code, is amended to read
12-19 as follows:
12-20 (a) The ordinance designating an area as a reinvestment zone
12-21 must:
12-22 (1) describe the boundaries of the zone with
12-23 sufficient definiteness to identify with ordinary and reasonable
12-24 certainty the territory included in the zone;
12-25 (2) create a board of directors for the zone and
12-26 specify the number of directors of the board as provided by Section
12-27 311.009;
13-1 (3) provide that the zone take effect immediately upon
13-2 passage of the ordinance [on January 1 of the year following the
13-3 year in which the ordinance is adopted];
13-4 (4) provide a date for termination of the zone;
13-5 (5) assign a name to the zone for identification, with
13-6 the first zone created by a municipality designated as
13-7 "Reinvestment Zone Number One, City (or Town, as applicable) of
13-8 (name of municipality)" and subsequently created zones assigned
13-9 names in the same form numbered consecutively in the order of their
13-10 creation;
13-11 (6) establish a tax increment fund for the zone; and
13-12 (7) contain findings that:
13-13 (A) improvements in the zone will significantly
13-14 enhance the value of all the taxable real property in the zone and
13-15 will be of general benefit to the municipality; and
13-16 (B) the area meets the requirements of Section
13-17 311.005.
13-18 SECTION 15. Nothing in this Act is intended to prohibit a
13-19 member of a governing body of a taxing unit that levies taxes on
13-20 real property in the reinvestment zone from serving as a member of
13-21 the board of directors of a reinvestment zone under the Texas Tax
13-22 Increment Financing Act (Chapter 311, Tax Code).
13-23 SECTION 16. The importance of this legislation and the
13-24 crowded condition of the calendars in both houses create an
13-25 emergency and an imperative public necessity that the
13-26 constitutional rule requiring bills to be read on three several
13-27 days in each house be suspended, and this rule is hereby suspended,
14-1 and that this Act take effect and be in force from and after its
14-2 passage, and it is so enacted.